Mustang has received firm commitments for a total of AU$2.4 million through a private share placement led by DJ Carmichael and Jett Capital

Includes AU$258,000 from Mustang management and Directors

The funds raised will be used to advance the Company’s Caula VanadiumGraphite Project in Mozambique and for general working capital

Mustang Resources Limited (ASX:MUS) (FRA:GGY) (“Mustang” or “the Company”) is pleased to announce that it has received formal commitments to raise approximately AU$2.4 million (before costs) via private placement (“Placement”) to professional and sophisticated investors and some of the Company’s directors. Of this amount AU$2.18m will be completed through the issue of 158,660,844 million new shares at $0.01374 per share. Of these new shares 138,636,844 will be issued under the Company’s 7.1 placement capacity and 20,024,000 under the Company’s 7.1A placement capacity.

Funds raised pursuant to the Placement will be used principally to further develop the Company’s Caula Vanadium-Graphite Project in Mozambique and for general working capital.

The Placement has been made to professional and sophisticated investors in Australia, Hong Kong and the United States, with DJ Carmichael and Jett Capital acted as the lead brokers in respect of the Placement.

The Company will also issue attaching options (“Attaching Options”) on a 1:2 basis, exercisable at $0.02, expiring 24 months from issue, which accords with the major Caula 24-month development milestones. The Company will seek quotation of the Attaching Options once issued. It should be noted that the issue of the Attaching Options is conditional on shareholder approval at a General Meeting expected to be held in late September 2018.

Settlement of the placement is expected to occur on or around 20 August 2018.

Mustang Resources Managing Director Bernard Olivier commented “This capital raise is important in the fast-tracked development of the Caula Vanandium-Graphite project in Mozambique where we have recently established a JORC Measured Resource of 22Mt @ 0.37% V2O5 and 13.4% TGC for 180Mlb of vanadium and 2.93Mt of graphite respectively. With the feasibility study drilling now well underway it is likely that the resource will be enlarged in the near future, and this placement plays an important role. We will update the market as soon as the drilling and scoping study results are available”.

Caula also hosts, within the same deposit, a JORC (Measured) graphite deposit of 21.9 Mt @ 13.4% TGC (8% cut-off) for 2,933,100 tonnes of contained graphite with high grade intersections up to 29% TGC2

Metallurgical testwork confirms exceptional quality graphite with more than 63% of cumulative proportion in large to super jumbo flakes sizes (>180μm) and excellent concentrate grades of 97% to 98% TGC3

Caula resource likely to be significantly enlarged in the near term:

The feasibility study drilling program on the Caula Vanadium-Graphite Project in Northern Mozambique is well advanced

3,025m of diamond drilling and 1,050m of reverse-circulation drilling planned for completion in Q3 20184

Caula Project increases Graphite Mineral Resource

The recently announced A$10m asset-for-shares swap with Fura Gems shifts Mustang’s primary focus to the Caula Graphite and Vanadium Project, which is located along strike from Syrah Resources’ large graphite project. Maiden Caula graphite and vanadium resources reflect high grades (13.4% and 0.37%, respectively). The scoping study due in Q318 will provide investors with insight into project economics, but the good grades and positive graphite metallurgical test results to date are encouraging signs. Trial mining could generate first revenues by mid-2019.

Montepuez to be merged into Fura Gems

Mustang Resources has announced a proposed A$10m transaction whereby Mustang will contribute its Montepuez ruby project into Fura Gems (FURA.TSX) in return for three tranches of shares in Fura. The deal structure allows Mustang’s shareholders to retain an indirect interest, of around 8%, in a substantial combined ruby project in Mozambique, which stands to benefit from the injection of funding and additional marketing expertise by Fura. In addition, Mustang’s shareholders also gain exposure to Fura’s Coscuez emerald mine in Columbia, where bulk sampling is already underway.

Focus now centres on Caula graphite and vanadium

Hiving off the ruby assets allows Mustang to focus its attention and funds more fully on Caula – which is rapidly proving to be a high-quality graphite and vanadium resource. In parallel to the scoping study currently underway and due by the end of this quarter, Mustang intends to progress to trial mining and processing at Caula, with first graphite and vanadium concentrates planned for mid-2019.

Significant potential value at Caula

Based on applying peer-group in-situ resource multiples to Caula’s 2,933kt of contained graphite (24 July 2018 resource update) and 81.6kt of contained vanadium (20 July 2018 maiden resource update), we would value the Caula graphite resource at US$27.5m (A$37.5m) and the vanadium resource at US$16.8m (A$22.9m) for a total valuation for Caula of US$44.2m (A$60.3m). This does not take into account any potential upside should further drilling continue to increase the scale of this project.

Caula: Graphite and vanadium

Mustang’s Caula graphite and vanadium project is in Mozambique along strike from Syrah Resources’ Balama project, which is projected to supply 40% of the flake graphite market by 2020. 1 The updated graphite resource at Caula (July 2018) confirmed the high-grade nature of the Caula deposit at 13.4% average total graphitic carbon (TGC), while the presence of significant vanadium (0.37% average V2O5) in the same deposit was confirmed by the recent maiden vanadium resource (July 2018). A scoping study on Caula is expected this quarter.

This product is classified as ‘very high risk’ in nature due to its location and geopolitical situation of the region. NextMiningBoom advises that extra caution should be taken when deciding whether to engage in this product, however if you are not sure whether it is suitable for you we suggest you seek independent financial advice.

MUS is now seeing promising assay results roll in from exploration at its graphite-vanadium operations, resulting in its maiden JORC-compliant vanadium Mineral Resource estimate at its Caula Vanadium-Graphite Project.

It features relatively flat ground with encouraging geological characteristics in that the vanadium is hosted in a mica mineral, making it potentially simpler and cheaper to extract final 98%+ vanadium products than traditional titano-magnetite deposits.

MUS delivered the maiden vanadium Resource last week, consisting of 22Mt at 0.37% vanadium pentoxide (V2O5), at a 0.2% grade cut-off, for a total of 81,600 tonnes of contained vanadium pentoxide all in the Measured category.

In addition to its maiden vanadium Resource, MUS also delivered a quadrupled graphite Mineral Resource estimate of 21.9 million metric tons at 13.4% Total Graphitic Carbon (TGC) for the Caula Graphite-Vanadium Project on Tuesday.

The company now plans to complete a Scoping Study in the third quarter and a Definitive Feasibility Study (DFS) by the end of the calendar year in order to rapidly advance the project towards initial vanadium and graphite production in mid-2019.

Of course, as with all minerals exploration, success is not guaranteed — consider your own personal circumstances before investing, and seek professional financial advice.

Recent results are highly encouraging and suggest that MUS is on track to meet it objectives.

Earlier in the month, MUS received further high-grade assays from the final holes drilled as part of the Scoping Study on the Caula Graphite and Vanadium Project.

These assays include intersections of up to 1.9% V2O5 and 28.9% TGC and contain multiple high-grade intersections over extensive widths and provide more strong evidence that Caula hosts extensive high-grade graphite mineralisation as well as highly promising vanadium mineralisation.

The results also highlight the potential for Caula to be a world-class, low-cost graphite and vanadium supplier to the steel industry as well as the fast-growing rechargeable battery industry. This is important in terms of assessing MUS’s valuation compared with other stocks leveraged to the burgeoning battery industry.

In fact, UK-based Edison Investment Research has valued the Caula Project alone at more than $60 million — a significant premium to the company’s current market cap of just $18 million.

Such is the quality of the news emerging from the Caula Project that it has been front and centre over the last three months. Certainly Caula is now the focus following news that MUS had agreed to merge its Montepuez ruby assets with Fura Gems Inc. (TSX-V:FURA) for A$10 million in Fura shares, plus a A$25 million spending commitment from Fura on the ruby assets over the next three years.

The deal will give MUS shareholders significant exposure to the rapidly growing ruby and emerald markets via a specialist gem company with extensive experience and a diversified asset base in the coloured gemstone industry. It also means that Mustang can focus all its attention on the world-class Caula project knowing that the ruby assets are fully funded for the next three years.

So let’s get a handle on the key value drivers that could be significant in terms of share price performance, particularly given management is hoping to bring the Caula project into production in 12 months.

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